Citigroup Inc. is stepping away from the mortgage servicing business by 2018 in an effort to focus on mortgage origination. The bank will unload servicing rights on approximately 780,000 Fannie Mae- and Freddie Mac-backed loans to New Residential Investment Corp. for $982 million, as well as rights to remaining loans to Cenlar FSB, a loan servicing provider. The loans have a combined balance of $97 billion.
“The acquisition of the [mortgage servicing rights] is expected to close in the first quarter of 2017, subject to government-sponsored enterprise and regulatory approvals and other customary closing conditions,” according to a statement from New Residential Investment Corp.
The bank expects a pretax loss of $400 million in the first quarter of 2017 as a result of the sales.
The Consumer Financial Protection Bureau (CFPB) recently ordered two Citigroup subsidiaries, CitiFinancial Servicing and CitiMortgage, Inc., to pay $28.8 million for giving “the runaround” to homeowners facing foreclosure, as well as other violations of Dodd-Frank, the Fair Credit Reporting Act and RESPA.
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